Can someone explain the steps to solve this Modified Internal Rate of Return pro
ID: 2791589 • Letter: C
Question
Can someone explain the steps to solve this Modified Internal Rate of Return problem?Lepton Industries has three potential projects, all with an initial cost of $1,800,000. Given the discount rates and the future cash flows of each project, what is the MIRR's of this project for Lepton Industries?
Project S
Year 1: $1,000,000
Year 2: $800,000
Year 3: $600,000
Year 4: $400,000
Year 5: $200,000
Discount Rate: 18% Can someone explain the steps to solve this Modified Internal Rate of Return problem?
Lepton Industries has three potential projects, all with an initial cost of $1,800,000. Given the discount rates and the future cash flows of each project, what is the MIRR's of this project for Lepton Industries?
Project S
Year 1: $1,000,000
Year 2: $800,000
Year 3: $600,000
Year 4: $400,000
Year 5: $200,000
Discount Rate: 18% Can someone explain the steps to solve this Modified Internal Rate of Return problem?
Lepton Industries has three potential projects, all with an initial cost of $1,800,000. Given the discount rates and the future cash flows of each project, what is the MIRR's of this project for Lepton Industries?
Project S
Year 1: $1,000,000
Year 2: $800,000
Year 3: $600,000
Year 4: $400,000
Year 5: $200,000
Discount Rate: 18%
Explanation / Answer
Using Financial Calculator
CF0=-1,800,000 (press enter) Press down key
CF1= 1,000,000 (press enter) Press down key
F01=1 (press enter) Press down key
CF2= 800,000 (press enter) Press down key
F02=1 (press enter) Press down key
CF3= 600,000 (press enter) Press down key
F03=1 (press enter) Press down key
CF4= 400,000 (press enter) Press down key
F04=1 (press enter) Press down key
CF5= 200,000 (press enter) Press down key
F05=1 (press enter) Press down key
Press IRR+CPT
IRR=26.67% Press down key
RI=18 (press enter) Press down key
Press CPT
MIRR=21.47%
Using Excel
Year Cash flow 0 -1800000 1 1000000 2 800000 3 600000 4 400000 5 200000 MIRR(using MIRR function in excel) 21.47%